As the author John A. Shedd once wrote, “a ship in harbour is safe, but that is not what ships are built for.”
Taking risks is the cornerstone of innovation – how can you really make an impact if you don’t dare to go where no one has gone before? But, as Collective Hub advisory board member Paul Schulte will attest to, there’s little point taking a risk that you know definitely won’t pay off either. So where’s the middle ground? In the realm of risk taking, there are a few ways you can try and secure a win and avoid a failure.
Determining what is a trend and what is a fad
It sounds like a simple distinction: one will last, one won’t. And while it’s a little more complex, it’s really all about doing your homework.
“You’ve got to do a great deal of research and immerse yourself into the market, into that price point and into trends around the world, making sure what you’re proposing is right,” Paul stresses. “You always get things wrong (maybe 10-20%) but you can’t get deflated about that. One of my philosophies has always been the fact that I just create what I know I would like to go to, what I think is missing in an area. It’s so important to put yourself constantly in the customers’ shoes.”
Chances are, Paul explains, that if you notice something missing, someone else has noticed the same absence. Then, you’ve found a gap to fill with your product.
“Don’t second-guess yourself about whether, ‘is that just me?’ Start documenting what you believe is needed, and where that’s needed the most and how realistically you can make it happen.”
Try testing your theory first
Many an entrepreneur has started with a toe in the water before diving in. That’s how starting a side project can benefit those who aren’t entirely sure they’ve got a viable product yet, while also allowing enough space to regroup if you should hit a roadblock.
“We’ve done that before with a pub, where we didn’t know the market amazingly well, so we just spent minimal cash on doing a pop up, and it was incredibly successful, so then our future project was basically derived around that pop up. [That] was great, because we ended up spending less and moulding the concept more according to what the customers were actually looking for.”
Paul cites the eternally popular Bucket List in Bondi, which was originally a pop-up that, due to demand, decided to stay around a little longer.
“Not everyone can afford to take a lease out and have a crack at doing it cheaply, but I guess that’s what markets are for. Markets are a prime example of seeing whether your product can go gangbusters,” Paul explains. “Even online these days, if you believe that there are a lot of people buying your jewellery from a certain area, maybe there’s an opportunity to do a shop.”
Testing will give you a helping hand to discovering whether there is a market for what you’re doing – if it does, you know you’re onto something. If not, it might be time to consider a pivot.
Find your own definition for success
Of course you want to succeed but in order to do so, you have to set parameters of what that looks like to you. Success may be selling one thing or telling 20 about your product on market day, or maybe it’s signing 100 people up to your newsletter. Either way, you’ve got to measure yourself by your own standards in order to understand whether what you’re doing is right.
“When you do your original projections, always have a low/medium/high forecast, and if you’re below that low, you’ve then got to set yourself a time frame of when you will either pop out of that or move to the next level,” Paul suggests.
In addition to defining success, it’s also just as important to define failure. Is failure running out of money, or just not making any?
“It’s about setting yourself the boundaries, and saying is there any way that this is going to look better in six months time? What am I doing? Don’t just rely on the fact that you [can] get out of it. If you don’t have a plan, if you don’t have enough cash to put into that plan, then it’s probably time to pull it. Always give yourself a sense of reality by stepping back and having a look at where things are at. Too many people get stuck in a business and can’t see the true picture.”
Embrace the opportunities that arise from failure
Risk isn’t such a risk if you understand the lessons that can sprout from a failed venture.
“Failure is motivation in my eyes. It’s another reason to prove that you can do it,” Paul presses. “You can bury your head in the sand, but it doesn’t achieve anything, so you’ve got to jump back up and actually get motivated by that and know what you’ve learned and how to make it different next time. Things won’t seem as risky if you’re resilient and ready to learn the right lessons.
“90 per cent of people fail, so if everybody just started putting their head down kicking cans, it would be a very sad society. So you’ve got to use it, and use your lessons. It’s critical that you don’t make those same mistakes twice.”
Learn to take advice
If we’ve said it once, we’ve said it a thousand times: finding a willing and generous mentor can work wonders on reducing risks in business. After all, who better to give advice than someone’s who lived that experience before?
“Mentorship’s a big thing. There [are] a lot of people that don’t give that enough justice,” Paul agrees. “It’s a privilege and an honour to be asked to be someone’s mentor, I think a lot of people don’t realise that. A lot of people just go, ‘oh, they’re too busy.’ But you’ve got to be a certain type of person if you don’t want to help someone who’s younger and leading on the same path. In my eyes, this is an opportunity.”